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The problem with lending to him is most of his assets are TSLA shares. It's arguably absurdly overvalued as an automaker, and any effort to liquidate his positi

The problem with lending to him is most of his assets are TSLA shares. It's arguably absurdly overvalued as an automaker, and any effort to liquidate his position would be expensive since it would drive the price down. Someone did it, but I'm sure some people passed. As someone else pointed out, TWTR isn't a great purchase, either. Its ad revenue isn't great, so if he defaults on the loan, the lender is stuck with an asset they don't want.

HWR_14 5y ago
They did it at a 5x multiple. They can cover the loan as long as Tesla stays above 203.
- hef19898 5y ago
  Was a similar loan among the reasons why a Tesla "bankrupcy" a couple of years ago wasn't that unlikely? It seems that the 203 $ are a reasonable valuation.
- dehrmann 5y ago
  That would be a bit lower than Toyota's value. Toyota sold 10.5M vehicles last year. Tesla sold 930k. Yes, Tesla's growth is solid, but the valuation is because of the true believers. I avoid investing in anything Elon touches because valuations get weird.
  - logifail 5y ago
    > Tesla's growth is solid, but the valuation is because of the true believers I'm really not what you'd call a believer in Tesla - although had my first ever ride in a one (a model 3) recently, quite an eye-opening experience. It's not as thought Tesla is the only company where the current valuation doesn't appear to make much sense looking at the numbers...
    - EtienneK 5y ago
      > eye-opening experience How so? I've had rides in Model S's before and it was totally... fine? What made the Model 3 experience so much better than a conventional car?
      - logifail 5y ago
        > I've had rides in Model S's before and it was totally... fine? What made the Model 3 experience so much better than a conventional car? I didn't actually say "better", but it was certainly a novel experience since I'd never been in an EV of any kind! The lack of engine noise coupled with the acceleration, somewhat mind-blowing. I'm not convinced that any current EV - never mind any Tesla - is yet a good fit for a family such as ours, but I look forward to the day when there is such a choice of vehicle.
logifail 5y ago
> any effort to liquidate his position would be expensive since it would drive the price down Didn't he sell quite a lot of stock last year? Bear in mind he just keeps getting more of it as part of his compensation... "Elon Musk unleashed a torrent of stock sales, options exercises, tax payment sales and gifted shares last year totaling nearly $22 billion. Yet even after unloading so much Tesla stock, he still owns a larger share of the company than when he started, thanks to his compensation package. Musk owns 172.6 million Tesla shares, or a 17% stake, which makes him its single largest individual shareholder."[0] [0] https://www.cnbc.com/2022/02/15/elon-musk-unloaded-billions-of-tesla-stockand-still-owns-more-than-last-year.html https://www.cnbc.com/2022/02/15/elon-musk-unloaded-billions-...
paganel 5y ago
Tesla is a strategic asset for the US and for the West more generally speaking, even more so than SpaceX at this point, I personally don’t think it will be allowed to tank/go under. I do agree that the stock is way over-valued when looking only at the economic fundamentals, but when one balances out the “the Chinese have all this battery thing all figured out!” vs “we only have Tesla on our side!” then things are different (and, yes, I know that the “Tesla batteries” are not 100% made by Tesla right now).
- lm28469 5y ago
  > Tesla is a strategic asset for the US and for the West more generally speaking How so ? It's a car company, there are dozen of them making equally good, if not better, cars. Autopilot is useless and electric cars are already there. You can credit them for the democratisation of EV but that's about it
  - paganel 5y ago
    It’s not a car company, it’s a battery+software company with some wheels (literally) attached, hence part of the high valuation. It took me a while to realize this, had I put my money on this back then I would have had more money right now (10x times, I’d say). The likes of Mercedes and VW are orders of magnitude behind, both when it comes to batteries and especially when it comes to software
    - hef19898 5y ago
      Batteries are coming from Panasonic. Other OEMs have working EVs as well. And Tesla is way to small in terms of economic foot print that its disappearance would make a dent. Economics, not on the stock market. Nothing about Tesla is strategic. SpaceX is different, sure. But with the exception of a yet-to-come lunar mission and astronaut trabsportation to the ISS the "West" got needed stuff into orbit just fine.
      - paganel 5y ago
        No other major car-maker has been able to come close to Tesla when it comes to the sleekness of their software and (especially that) when it comes to the cars' autonomy, Tesla is in a class of its own. And it's not for lack of trying, the Germans have already poured tens of billions of euros (at least) into the EV market.

HWR_14 5y ago

They did it at a 5x multiple. They can cover the loan as long as Tesla stays above 203.

hef19898 5y ago
Was a similar loan among the reasons why a Tesla "bankrupcy" a couple of years ago wasn't that unlikely? It seems that the 203 $ are a reasonable valuation.
dehrmann 5y ago
That would be a bit lower than Toyota's value. Toyota sold 10.5M vehicles last year. Tesla sold 930k. Yes, Tesla's growth is solid, but the valuation is because of the true believers. I avoid investing in anything Elon touches because valuations get weird.
- logifail 5y ago
  > Tesla's growth is solid, but the valuation is because of the true believers I'm really not what you'd call a believer in Tesla - although had my first ever ride in a one (a model 3) recently, quite an eye-opening experience. It's not as thought Tesla is the only company where the current valuation doesn't appear to make much sense looking at the numbers...
  - EtienneK 5y ago
    > eye-opening experience How so? I've had rides in Model S's before and it was totally... fine? What made the Model 3 experience so much better than a conventional car?
    - logifail 5y ago
      > I've had rides in Model S's before and it was totally... fine? What made the Model 3 experience so much better than a conventional car? I didn't actually say "better", but it was certainly a novel experience since I'd never been in an EV of any kind! The lack of engine noise coupled with the acceleration, somewhat mind-blowing. I'm not convinced that any current EV - never mind any Tesla - is yet a good fit for a family such as ours, but I look forward to the day when there is such a choice of vehicle.

logifail 5y ago

> any effort to liquidate his position would be expensive since it would drive the price down Didn't he sell quite a lot of stock last year? Bear in mind he just keeps getting more of it as part of his compensation... "Elon Musk unleashed a torrent of stock sales, options exercises, tax payment sales and gifted shares last year totaling nearly $22 billion. Yet even after unloading so much Tesla stock, he still owns a larger share of the company than when he started, thanks to his compensation package. Musk owns 172.6 million Tesla shares, or a 17% stake, which makes him its single largest individual shareholder."[0] [0] https://www.cnbc.com/2022/02/15/elon-musk-unloaded-billions-of-tesla-stockand-still-owns-more-than-last-year.html https://www.cnbc.com/2022/02/15/elon-musk-unloaded-billions-...

paganel 5y ago

Tesla is a strategic asset for the US and for the West more generally speaking, even more so than SpaceX at this point, I personally don’t think it will be allowed to tank/go under. I do agree that the stock is way over-valued when looking only at the economic fundamentals, but when one balances out the “the Chinese have all this battery thing all figured out!” vs “we only have Tesla on our side!” then things are different (and, yes, I know that the “Tesla batteries” are not 100% made by Tesla right now).

lm28469 5y ago
> Tesla is a strategic asset for the US and for the West more generally speaking How so ? It's a car company, there are dozen of them making equally good, if not better, cars. Autopilot is useless and electric cars are already there. You can credit them for the democratisation of EV but that's about it
- paganel 5y ago
  It’s not a car company, it’s a battery+software company with some wheels (literally) attached, hence part of the high valuation. It took me a while to realize this, had I put my money on this back then I would have had more money right now (10x times, I’d say). The likes of Mercedes and VW are orders of magnitude behind, both when it comes to batteries and especially when it comes to software
  - hef19898 5y ago
    Batteries are coming from Panasonic. Other OEMs have working EVs as well. And Tesla is way to small in terms of economic foot print that its disappearance would make a dent. Economics, not on the stock market. Nothing about Tesla is strategic. SpaceX is different, sure. But with the exception of a yet-to-come lunar mission and astronaut trabsportation to the ISS the "West" got needed stuff into orbit just fine.
    - paganel 5y ago
      No other major car-maker has been able to come close to Tesla when it comes to the sleekness of their software and (especially that) when it comes to the cars' autonomy, Tesla is in a class of its own. And it's not for lack of trying, the Germans have already poured tens of billions of euros (at least) into the EV market.